Tuesday, December 10, 2013

Taxpayers waste $10.5 billion on UAW/GM.

Remember
TV commercials in early 2010
where GM's then-CEO Ed Whitacre proclaimed the automaker had paid back
its loans in full? Though technically accurate — the automaker
repaid $8.1 billion in loans
from the U.S. and Canadian government in April 2010 — the ads
suggested taxpayers had no more involvement in Detroit's largest
automaker.
Critics argued
that wasn't the case. When the Bush and Obama administrations
orchestrated a $49.5-billion bailout of the ailing automaker in 2008 and
2009, part of the deal involved the U.S. Treasury taking a 61-percent
ownership stake in The General. Taxpayers have held a stake until now.

The Treasury
announced Monday
that it sold its remaining shares in GM, whose U.S. brands include
Buick, Cadillac, Chevrolet and GMC. But the automaker may want to hold
off an ad blitz this time around. That's because the final chunk of a
progressive sell-down means we can finally total the losses, and the
bill for taxpayers is $10.5 billion.

This week marked the final chunk of the sell-down, which began in earnest when the government
sold its stake down to 33 percent
during GM's November 2010 IPO. In December 2012, GM
purchased another chunk
as the Treasury announced plans to sell its remaining stake — roughly
19 percent of the automaker at the time — by March 2014. It ran ahead of
schedule; by September, taxpayers owned
just 7.3 percent
of GM.

Still, every stock sale meant booking more taxpayer losses. That's why
the Treasury didn't sell any stock between the November 2010 IPO and
after the 2012 presidential election,
the Detroit News points out
. After opening at around $35 a share in late 2010, GM stock languished for much of 2011 and 2012 in the $20 to $30 range —
far less
than the government would need to break even on its bailout
investment. The automaker's stock broke $40 for the first time this
month, and U.S. Treasury Secretary Jack Lew said Monday that the
government sold off its final 2.2 percent stake in the automaker,
according to the Detroit News.

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